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What initiates carbon dioxide emissions along the Belt and Road Initiative? An insight from a dynamic heterogeneous panel data analysis based on incarnated carbon panel

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Abstract

The Belt and Road Initiative (BRI), as an economic cooperation, provides interaction between the relevant countries and China. This cooperation between the BRI economies is basically aimed at increasing economic development. However, economic cooperation affects humanity in many ways, such as job creation, economic growth, environmental changes, and changes in the consumption of energy. Among these changes, considerable attention has been drawn to CO2 emissions arising from economic growth and its related environmental changes. This attention is vital in order to achieve the UN sustainable development goal 13: urgent action to combat climate change and regulations for the emissions of CO2. Thus, this study explores the determinants of CO2 emissions along the BRI, taking into consideration if countries are net importers or exporters of incarnated carbon dioxide. The econometrics applied indicated the presence of slope heterogeneity and cross-sectional dependencies across the various panels. Applying the Westerlund bootstrap co-integration unveiled the presence of a long-run equilibrium association among the variables. The results from the dynamic common correlated estimator (DCCE) revealed that the contribution weight (order of importance) to CO2 emissions varies across panel clusters. The causality results unveiled a bidirectional causation in all panels between economic growth and CO2 emissions. Trade openness and CO2 emissions have a bidirectional effect in the belt and road and net exporters of incarnated carbon dioxide panels. Based on the results obtained, the policy implications suggested that (a) energy transition from fossil fuel usage to renewables will play a crucial role in mitigating economic growth’s environmental pressures and (b) governments along the BRI could also implement subsidy swaps involving the transfer of government aid from oil and coal gas to renewable sources, including wind and solar.

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Availability of data and materials

All data used in this study are publicly available online. The information on the sources of data is provided in Table 2.

Notes

  1. Goal 13: Take urgent steps and impact measures to tackle climate change. In 2019, the atmospheric levels of greenhouse gases especially CO2 have gained new high. Climate change is actually affecting one country and the other as well as each continent. This is undermining countries’ economies and affects human lives. Climate trends are really changing, sea levels are continuously stepping up, and climate events are becoming more austere. The Paris Agreement, espoused in 2015, seeks to improve the global response to climate change by sustaining a rise in global temperatures well below 2 °C. The agreement as well aimed to enhance the capacity of countries to cope with the impacts of this global change via a suitable new model of technology, financial flows, and an enhanced process of capacity building.

Abbreviations

GP:

gross domestic product

CO2 :

carbon dioxide emissions

FF:

fossil fuel consumption

IND:

industrialization

DF:

domestic financial assistance

TR:

trade openness

ARDL:

autoregressive distributed lag

GMM:

generalized method of moments augmented mean group

CCEMG:

common correlated effects mean group

VIF:

variance inflation factor

PMG:

pooled mean group

CADF:

cross-sectional dependent augmented Dickey Fuller

CIPS:

cross-sectionally IPS

CSD:

cross-sectional dependency

BRI:

Belt and Road Initiative

BRICS:

Brazil, Russia, India, China, and South Africa

OECD:

Organization for Economic Co-operation and Development

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Acknowledgements

The authors are very grateful for the critical comments made by the Editor (Prof. Roula Inglesi-Lotz) handling the manuscript and the anonymous referees, who have significantly improved the quality of the paper.

Funding

This work was supported by the National Natural Science Foundation of China with Grant No. 71701082.

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Authors and Affiliations

  1. Institute of Applied Systems and Analysis (IASA), School of Mathematical Science, Jiangsu University, Zhenjiang, 212013, People’s Republic of China

    Olivier Joseph Abban & Yao Hongxing

  2. School of Finance and Economics, Jiangsu University, Zhenjiang, 212013, People’s Republic of China

    Yao Hongxing

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Y.H supervised the research from the beginning to the end. O.J.A and Y.H conceived the study. O.J.A collected the data, O.J.A estimated the econometric model, and O.J.A drafted the manuscript. The authors read and approved the final manuscript.

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Abban, .J., Hongxing, Y. What initiates carbon dioxide emissions along the Belt and Road Initiative? An insight from a dynamic heterogeneous panel data analysis based on incarnated carbon panel. Environ Sci Pollut Res 28, 64516–64535 (2021). https://doi.org/10.1007/s11356-021-14779-5

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